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Someone who invested their money in a Nasdaq 100 certificate on top of the "dotcom bubble" is today 4x better off than someone who held USD. Someone who invest
by ArtTimeInvestor 3y ago
Someone who invested their money in a Nasdaq 100 certificate on top of the "dotcom bubble" is today 4x better off than someone who held USD.
Someone who invested their money in Amazon on top of the "dotcom bubble" is today 50x times better off than someone who held USD.
- mvdtnz 3y agoAre you making the argument that there was no dot com bubble?
- pasiaj 3y agoDiscounted Cashflows calculation for Nvidia would require 10x growth and a 55% profit margin for 10 years to justify the current valuation. If the company achieves a 4-5X growth (15% per year) and 30% margins (instead of 55%) that would place the share price at $176 - 1/4th of what it is today.
- ArtTimeInvestor 3y agoThose abstract numbers don't help us evaluate the value of a company. Let's look at the addressable market: The sum of wages in the USA alone is about $100T per year. How much is it worldwide? Let's say $400T. That is the current TAM when we expect computers to replace humans like cars replaced horses. Capturing only 1% of that TAM would mean $4T in yearly revenues. Nvidia's $2T market cap seems tame in face of the size of the opportunity. But there is another point: A new technology not just replaces an old technology. It 10xes the usage. There are way more cars on the road now than there were horses back then. The size of the market will grow beyond those $400T. We will build way more stuff when robots carry out all the work. Most of planet earth is unused at the moment. That will change.
- kergonath 3y agoThis does sound suspiciously like the “everything Internet” of the dotcom bubble.
- ArtTimeInvestor 3y agoAnd here we are now. On the internet.
- kergonath 3y agoThe thing being useful in the long term does not mean that any valuation is right, or that any business model involving the thing makes sense. These are different things.
- acdha 3y agoYes, but very few of the companies that was used to promote are still here or relevant. You can be right about the global trend but wrong about individual companies. For example, in 1999 I bought food & other goods by delivery to my office and worked with companies selling online, using my handheld computer with a fast wireless connection. Clearly those were ultimately successful ideas, but that didn’t mean that investors in Kozmo, Pets.com, Ricochet, or Handspring got rich.
- asadotzler 3y agoThe internet is not the web and the dot com bubble was not the internet, it was the web. Are you too young to remember any of this or just getting it wrong. The interent was always going to find uses and already had before the web and the dot com bubble so saying "the internet's great" isn't relevant.
- kortilla 3y agoCompanies don’t pay nvidia for that though because nvidia doesn’t offer a product to replace 1% of the workforce.
- p1esk 3y agoIf robots carry out all the work there will be no 400T in salaries
- ivalm 3y agoThere will be equivalent value. Just means need UBI/etc
- p1esk 3y agoHow is this going to work exactly?
- pixl97 3y agoThat's the fun part, nobody knows. But at the end of the day values of money are made up bullshit that attempt to assign a number to scarcity. If we make a world where computers can cheaply (energy/material wise) make all the items humanity needs, that future world is one that is a lot better off then the one we currently exist in. At least if we consider human needs being met valuable. If science fiction tropes have any connection to reality, us humans may sit around all day in hedonistic gay space communism playing games while robotic/AI systems produce and trade needed resources and energy between each other producing 'value' while humanity itself is just a value sink.
- p1esk 3y agoIn this scenario some people will still be rich and powerful while the rest will be poor and powerless. Only now the elites don’t really need the poor, right? So what’s going to happen when the next Hitler decides to shrink the world population using robot armies?
- klausa 3y agoI'm sorry; are you trying to suggest that the total addressable market of Nvidia is _literally the entire world's wages_?
- ivalm 3y agoThat’s literally the AI bull case. Replacement of all human labor.
- kortilla 3y agoNo it’s not. The bull case is replacement of labor that interacts directly with computers, and that one is already super bullshit based on the current results.
- ArtTimeInvestor 3y agoThe world's wages are the TAM for replacing humans with computers. Nvidia is a key player in this. So I would be surprised if they capture less than 1% of that value.
- asadotzler 3y agoI would be surprised if they capture 1/10th of 1%, heck, 1/100th of 1% of the worlds annual wages. You're losing folks here with some pretty wild predictions based on absolute guesswork with no supporting reasoning other than you'd be surprised.
- themoonisachees 3y agoAlso consider: fundamentals matter for individual investing, but on the whole the market does not care at all about fundamentals. Many things are overpriced or underpriced because the planets aligned, and pretending that the stock market is an accurate representation of the value of each company is missing the forest of thinly-veiled gambling as a business for the trees.
- mvdtnz 3y agoThis kind of ridiculousness is exactly the style of nonsense we hear during bubbles. You're really making the claim that the addressable market for these word guessing machines includes every person who hires plumbers, drain layers, house painters, hookers, massage therapists, chimney sweeps and MotoGP riders. This rhetoric is out of control.
- asadotzler 3y agoThey're very silly people and I too was trolled by their silliness into responding.
- mint2 3y ago“Most of planet earth is unused at the moment. That will change.” correct, it needs used for what its true purpose is: paper clip feedstock. But seriously, what does that comment event mean. The earth isn’t being used? More use would invariably be mean more dystopian, despoiled and privatized, why is that good?
- bjconlan 3y agoYou're not accommodating that the value of people /mechanical turks can be adjusted to perhaps a value lower than this in some regions... This obviously will put downward pressure on all regions... Except perhaps the people who serve said services (not specifically Nvidia). If anything this plays into OpenAI's/Sam's goal of creating an AI-hardware fab (and with the current market valuations he'll probably get what he needs to do it) Mind you my personal perspective orients towards the opinion that tech companies do lead the markets more than others through metrics I can't personally rationalise but it's something we all seem to agree with (and I'm ok with if my superannuation/401k is always growing)
- asadotzler 3y agoYou're just making up that TAM capture percentage and I think it's bullshit.
- fspeech 3y agoNvidia p/e is less than 40 based on their most recent quarter run rate. If they get 15% growth from here their current valuation is more than justified. The problem is their revenue is their customers' cost. And generative AI companies, whose voracious demand for compute drives the surge in Nvidia sales, aren't making anywhere remotely close to $80B a year, the current run rate of Nvidia data center sales.
- DonsDiscountGas 3y agoNVIDIAs margins are likely to stay high, that's the nature of selling highly specialized technology. 10x growth does seem like stretch though.
- eVeechu7 3y agoBut who would substitute a no risk asset for a high risk one? This is a specious comparison.
- cko 3y agoSomeone who wants put their money to work. Lots of cash doing nothing on the sidelines is risky in the long term because inflation. A "risky asset" is risky in the short term because of volatility.
- kergonath 3y agoIt’s completely different. The acceptable risk profile changes depending on a lot of factors, not only returns on investments. Someone holding on NASDAQ in back in the day would not see their investment go back to 2001 levels until 2016. That was quite a deep hole to climb out of.
- nly 3y agoIn the long run, cash is the high risk asset. Cash is low volatility, not low risk.
- lmm 3y agoWhat about the people who invested their money in Pets.com?
- kergonath 3y agoTrue, 20 years after the bubble. It took a while to recover, though, and the years just after were not that happy.
- leetrout 3y agoLost about half my college money in the bust. Not everyone can wait X years to get it back
- kergonath 3y agoExactly.
- ArtTimeInvestor 3y agoOnly for the rare case when someone put all their savings into tech companies in one big swoop exactly at the top of 2000. If you imagine a person, say 30 years, who thought in 1980 "Hey, I'm going to hold my savings in tech companies because tech is where the music is" and started accumulating throughout the 80s, 90s, 00s, 10s ... They would have a great time all along. And would be a happy 70 year old now.
- AlbertCory 3y agoI'm sorry, but you sound like this is your first rodeo. Every tech boom in history was kicked off by wild speculation and ridiculous prices. Some of them turn out to be worth it, but practicing hindsight like you're doing is less than worthless. The dot-com boom was followed by the dot-com crash, and this will be no different.
- kergonath 3y agoThat’s not relevant to the discussion here, though. To paraphrase, it was: “lol what bubble? Stocks are much higher than they were in 2000.” “But they still took 15 years to recover”. Whether it was smart or not to go all in on NASDAQ is not really material. To address your point anyway, plenty of investment and pension funds were badly hit. Because even if you diversify, when a whole sector of the industry loses 20% in a couple of months, it hurts even people who did not invest themselves. I lived through these years and the ripple effects went much, much further than just some reckless venture capitalists. And broadening the outlook a bit, not everyone can afford to stay illiquid for 20 years, particularly in the US where the social safety net is not very effective. Also, what about the not-boomers who were not in a state to invest in the 1980s? Plenty of 20- to 30-somethings were wiped out as well. Knowing that the market will be up 20 years from now (and not the stocks you might hold, mind) is cold comfort. If you don’t remember it or did not live through it, I can tell you that it hurt quite a lot and no amount of hindsight now about what people should have done is going to change that.
- charcircuit 3y agoThose are somewhat meaningless as people avoiding a bubble can still invest later. If the person had waited until after the bubble he could have made 500x instead of 50x. Just because something may eventually be a profitable investment that doesn't mean that it is the best place for you to currently invest your money.
- Ekaros 3y agoAnd it is not like at this moment there isn't reliable and reasonable targets for money. You might not get the tech numbers, but debt now return pretty good.
- OJFord 3y agoOk but you're cherry-picking companies with the benefit of hindsight on dotcom, but not on 2024-AI. What about like Lycos, Pets.com, Yahoo, Palm, or companies that still exist but I'm not sure where they sit relatively without checking like MicroStrategy or IBM? And maybe Nvidia will do 50x over the next 24 years, but will Applied Materials, or Meta, or whatever else you might pick?
- rchaud 3y agoAmazon sold books and CDs during the dotcom boom, and is a textbook definition of survivor bias. They'd be a dead company if Bezos hadn't managed to scrape enough funding together until AWS, an entirely different business, got off the ground.
- xetplan 3y agoThe poster child of survivorship bias. They didn't just sell books and CDs either. They sold tax free books and CDs. It is easy to forget now that no one paid tax for anything sold online in 1999. Of course, no one brags about how they bought Borders stock in 1995 today. I am sure if you did you were up huge in 1999 but not so great if you held.
- rchaud 3y agoThe original version of my comment included the decade-long sales tax dodge, but I removed it for clarity. I'm glad to see that people remember that era.
- asadotzler 3y agowe always ordered big ticket items from tax free catalogs, even if we had to work to get the catalogs, dating back to the early 80s even.